While the dollar is up, every other asset class is lower since the September FOMC statement ahead of the least-anticipated Fed meeting of the year. Fed funds implied a 14% chance of a rate hike today but sentiment was for a 0% chance with expectations of a hawkish-biased statement (67% prob of Dec hike). From Bloomberg:

*FED DECIDED TO WAIT FOR TIME BEING FOR SOME FURTHER EVIDENCE

*FED SAYS CASE FOR A RATE HIKE HAS CONTINUED TO STRENGTHEN

*FED SAYS GEORGE AND MESTER DISSENT IN FAVOR OF RATE HIKE

With no press conference to explain the latest phrasing, we can only assume the jawboning and newspeak will be heavy to covince the world December will be a “dovish hike.”

Notably, while in the September meeting there were 3 disenters, George, Mester and Rosengren, this time Rosengren decided to join the majority, leaving just two dissenters.

While the statement itself contained 7 fewer words than in September, there were virtually no changes. Perhaps the most notable change in the wording of the statement is that the following phrase was struck out:

“Inflation is expected to remain low for the near term”

and replaced with

“Inflation is expected to rise to 2 percent over the medium term”

The Fed also changed the language to the phrase that “Market-based measures of inflation compensation remain low” and replaced it with “…have moved up but remain low.”

The one negative is that the degree of spending was downgraded as “Household spending has been growing strongly” has been changed to “rising moderately.”

The FOMC also said that “The Committee judges that the case for an increase in the federal funds rate has continued to strengthen” strongly hinting that a December hike is now almost inevitable absent a market crash.

Also of note, as Bloomberg reminds us, remember when June was a good deal about Brexit? There is no mention of uncertainty related to the U.S. election, as expected. The FOMC message is the committee makes its decisions with no notice of politics.

* * *

A quick breakdown of the salient points from Bloomberg:

RISKS: FOMC sticks with assessment that near-term risks to outlook are “roughly balanced”; continues to say it is “closely” monitoring inflation indicators and global economic/financial developments

INFLATION: Now says inflation has increased “somewhat” since earlier this year, yet still below 2% objective; no longer says inflation to remain low in near term; now says market-based measures of inflation compensation have moved up but remain low

ECONOMY: Fed sticks with September assessment describing growth in economic activity as picking up from modest pace in 1H and U.S. labor market as continuing to strengthen with unemployment rate little changed recently; now says job gains were solid, instead of solid, on average; Continues to expect U.S. economy to evolve in way that warrants “only gradual increases” in rates in future

RATES: Target range for fed funds rate has been held at 0.25%-0.50% for seven straight meetings, with last change in December 2015

DISSENTS: Decision included two dissents from regional Fed presidents Esther George, Loretta Mester, who favored raising fed funds rate to range of 0.50%-0.75% again; George has dissented five times this year